Ratings Recap: Exporters, MICO, Jupiter
Fitch Ratings has downgraded to ‘BBB’ from ‘A-‘ the Insurer Financial Strength (IFS) ratings of Exporters Insurance Company, Ltd. and its subsidiary, Exporters Insurance Company (Europe) Limited, following the closing of QBE Holdings, Inc.’s acquisition of Exporters’ renewal rights and existing underwriting platform. QBE will administer the run-off of Exporters’ existing portfolio. Fitch said the downgrade reflects its belief that “Exporters’ status as a run-off company will result in a weakened capital position over time and with limited income sources. Fitch also believes that Exporters remains susceptible to increased reinsurance recoverable risk related to the run-off, as well as increased investment losses and claims related to credit market volatility. As of Sept. 30, 2008, Exporters had experienced an increase in paid losses that has resulted in the company posting an underwriting loss.”
A.M. Best Co. has affirmed the financial strength rating of ‘B++’ (Good) and the issuer credit rating of “bbb” of the Philippines-based Malayan Insurance Co., Inc. (MICO) with stable outlooks. “The ratings reflect MICO’s solid market profile, balanced investment portfolio and adequate capitalization level to support its asset and underwriting risk exposures,” said Best. “MICO has been the market leader in the domestic non-life insurance industry for the past 38 years, capturing approximately 19 percent (in terms of
gross premiums written [GPW]) of the market share in 2007. Through its extensive distribution channels and the recent merger with Tokio Marine Malayan Insurance Co., Inc. in July 2008, MICO is expected to further solidify its leadership position in the local market going forward. In addition, the company has strengthened its direct sales business by increasing the proportion of its retail business. A.M. Best anticipates MICO to continue with this strategy for the next five years.”
A.M. Best Co. has affirmed the financial strength rating of ‘A+’ (Superior) and issuer credit rating (ICR) of “aa-” of the Guernsey-based captive Jupiter Insurance Limited, both with stable outlooks. Best said: “The ratings reflect Jupiter’s superior risk-adjusted capitalization and excellent financial performance, partially offset by potentially volatile operating results. Jupiter is a captive of BP plc, an integrated oil and gas company.” In Best’s opinion, “Jupiter’s underwriting performance decreased in 2008 compared to 2007, although remaining at an excellent level. In 2008, the company’s combined ratio increased to 29 percent from 7 percent in 2007, with exposure to Hurricane Ike accounting for 24 percentage points.” Best also anticipates that the company’s excellent financial performance “will continue into 2009, with a return on equity (ROE) projected between 15 percent and 20 percent.”